86-year-old former attorney to pay $14m for role in crypto Ponzi scheme

Disbarred California attorney David Kagel has agreed to pay nearly $14 million in restitution as part of his sentencing for operating a multimillion-dollar cryptocurrency Ponzi scheme that defrauded investors over several years.

According to a ruling by Las Vegas federal court judge Gloria Navarro, 86-year-old attorney David Kagel pleaded guilty and was sentenced to five years of probation and ordered to pay a total of $13.94 million as financial penalties for his role in the Ponzi that defrauded victims out of roughly $15 million.

Kagel, currently in hospice care at a senior facility in Las Vegas due to declining health, will serve out his probation under close supervision. Should he leave the facility, he will be required to wear a monitoring device.

Once a respected attorney, Kagel’s fall from grace is marked by his role in orchestrating a crypto Ponzi scheme that was operational between December 2017 and June 2022. Along with his accomplices, he lured victims with false promises of guaranteed high returns with minimal risks and the allure of AI-driven trading bots.

Using his law firm’s letterhead to gain trust, Kagel defrauded investors of millions, painting a picture of legitimacy that masked the fraudulent empire he helped run. Victims were promised returns of up to 100% within just 30 days of investment.

Kagel falsely claimed to hold 1,000 Bitcoin—worth $11 million at the time—in escrow to reassure investors that their funds were secure. Prosecutors further add that he lied about his past experience with cryptocurrency investments.

Kagel was permanently disbarred by the State Bar of California in 2023 after being found guilty of misappropriating client funds and failing to respond to multiple disciplinary actions, according to the State Bar’s official records. This marked the end of a troubled legal career, which had already seen his license suspended twice before—in 1997 and 2012.

His accomplices in the con David Gilbert Saffron, a resident of Australia, and Vincent Anthony Mazzotta Jr. of Los Angeles, were charged in December 2023, but they have pleaded not guilty and are currently awaiting trial.

Surge in crypto fraud

Crypto scams and Ponzi schemes have grown more sophisticated over the years and have become a recurring issue. In 2024 alone, several such schemes siphoned millions from unsuspecting individuals eager to capitalize on the hype surrounding crypto investments.

In June, a U.S. federal court ruled that Sam Ikkurty and his firm, Jafia LLC, operated a Ponzi scheme by soliciting investments from victims with false promises of high, stable returns and misleading claims about their trading expertise. Instead, funds from new investors were used to pay off previous ones, with the remainder misappropriated for personal use.

Similarly, in May, a Canadian crypto influencer Aiden Pleterski was charged with fraud and money laundering for his role in an alleged Ponzi scheme where he amassed $40 million from 160 investors, promising investments in crypto and foreign exchange markets.

Just weeks prior to that, the FBI uncovered a multi-year Ponzi scheme that defrauded victims of $43 million using similar tactics.